Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs.Expected mug sales at Fab (in units)for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales.How many mugs should Fab plan on producing during the month of November?

Question

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs.Expected mug sales at Fab (in units)for the next three months are as follows:  Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales.How many mugs should Fab plan on producing during the month of November?

Quizplus · Accepted Answer

First, we need to calculate the finished goods inventory for each month:

September: 14,000 x 0.3 = 4,200
October: 15,000 x 0.3 = 4,500
November: 16,000 x 0.3 = 4,800

Now we can calculate the total number of mugs needed for the next three months:

14,000 + 15,000 + 16,000 + 4,200 + 4,500 + 4,800 = 58,500

This means that Fab needs to produce a total of 58,500 mugs for the next three months. To find out how many mugs they should produce in November, we need to subtract the finished goods inventory for November from the estimated sales for December:

16,000 x 0.3 = 4,800 (November finished goods inventory)
15,000 x 1.3 = 19,500 (December estimated sales including finished goods inventory)

19,500 - 4,800 = 14,700 (total mugs needed to be produced in November)

Therefore, the answer is B) 26,800 mugs.

Fab Manufacturing Corporation Manufactures and Sells Stainless Steel Coffee Mugs